HomeBuilder: a missed opportunity to fix social housing

The AFR’s Robert Harley has penned an article arguing that the Morrison Government’s HomeBuilder subsidy for dwellings and renovations is a “missed opportunity” to fix the chronic shortage of social housing:

For me, the disappointment is the failure, once again, to address the substantial need for social and affordable housing. Particularly at a time when a Commonwealth government commitment could leverage low-interest rates, spare industry capacity and private sector interest to address the worst undersupply in Australian housing…

“Not including social housing in a housing stimulus package is negligent,” says the chief executive of National Shelter, Adrian Pisarski…

Essential accommodation for those with the lowest incomes and the highest needs is the most undersupplied sector of Australian housing.

National Shelter’s Pisarski estimates the current shortfall at around 500,000 homes.

In the aftermath of the GFC, the Rudd government built 20,000 new homes and brought another 80,000 up to modern standards. Few remember because it was a successful program free of controversy.

It’s an argument also mounted by the Grattan Institute’s Brendan Coates:

…under such schemes [like HomeBuilder], governments also end up giving grants to people who would have bought a home anyway… That’s a lot of spending for little economic gain.

Nor do grants to home buyers actually make housing more affordable. They are typically passed through into higher house prices, which benefits sellers more than buyers. In this case, that is likely to include developers eager to clear their existing stock of both newly and nearly built homes…

Social housing – where rents are typically capped at no more than 30% of household income – provides a safety net to vulnerable Australians.

In particular, the Morrison government should repeat another GFC-era policy, the Social Housing Initiative, under which 19,500 social housing units were built and another 80,000 refurbished over two years, at a cost of A$5.2 billion.

Under the initiative the federal government funded the states to build social housing units directly or contract community housing providers to act as housing developers

Public residential construction approvals spiked within months of the announcement.

Building 30,000 new social housing units today would cost between A$10 billion an A$15 billion. Because state governments and community housing providers won’t have to worry about finance, marketing and sales, they’ll be able to get to work building homes much quicker than the private sector.

The boost to the economy would be pretty immediate.

Just as important, building social housing would also help tackle the growing scourge of homelessness.

Both are 100% correct. Taxpayer funds would be far better spent on building social housing, given:

  1. There is a massive homelessness problem in Australia; and
  2. Stimulus would not be wasted on people that were going to buy a new home or renovate anyway.

According to research from the Australian Housing and Urban Research Institute (AHURI), Australia was suffering from a critical shortage of 433,000 social housing dwellings in 2016 that would continue to worsen by an additional 727,300 dwellings by 2036 without corrective policy action:

The report estimated that a ten-fold increase in building rates was required to overcome the current social housing shortfall and to cover projected growth in need by 2036. This would require a three-fold expansion of the national social housing stock above its 2016 level.

That is, just to prevent the social housing shortage from getting worse, 15,000 extra dwellings a year would need to be built – over 290,000 homes over the next 20 years. However, to also eliminate the backlog would require an annual social building program of 36,000 units a year – a daunting task.

The big winners from HomeBuilder are large developers, who will be able to inflate the cost of their house-and-land packages, while also clearing their inventory.

It’s another wasteful policy aimed squarely at the Coalition’s property industry mates, rather than Australians in genuine need.

Leith van Onselen

Comments

  1. Wonder if there’ll be a royal commission into the inevitable tradie deaths this time?

    Think Labor have the balls to scream PINK BATTS every 16 seconds like the Libs did?

    • Lord Winchester EntwhistleMEMBER

      Well, they might want to choose a less insensitive colour this time, but one would hope!

      I can see them alighting their trusty steeds now, resplendent in their battle dress – polyester suits, lace gowns – and rather large and unconvincing battle-feathers!

        • Lord Winchester EntwhistleMEMBER

          Very good! Alas it has not been a good season for turkeys! I checked with my bird-master – he however indicates it is a very good season for peacock feathers.

          Finery and frippery, flailing feathers flippantly.

  2. Tradies hate this, because you can’t pay them in cash. It all has to be above-board, and hence taxable.

    • Lord Winchester EntwhistleMEMBER

      Some soothsaying: a trade capable of doing 150k builds in the time frame are unlikely to be cash businesses!

  3. GlendaFMEMBER

    ‘The big winners from HomeBuilder are large developers, who will be able to inflate the cost of their house-and-land packages, while also clearing their inventory.’
    Actually there’s also another huge winner out of this ‘clayton’s reno policy…. how many of the people who may be eligible for this ‘grant’, eg those on either less than $125k (single) or less than $200k (couple) have a spare $150k hanging around doing nothing?
    Probably not too many? So how will this ‘policy’ be taken up? With a loan from the bank of $125k
    So construction = winner and banks = winner!!! Go Scummo!!!

    • first of all this is two small to have much effect … 25k grants all together – a drop … even if every grant creates new extra unplanned 125k of debt that’s $5bn of 2% of usual new mortgage debt annually

      all builders but especially big players are much more interested in clearing inventories than prices … profit margins in our large player building industry are huge, selling more and more quickly (before 25k limit gets hit) is way more profitable for them than trying to get better price on fewer units. So that clear interest to sell as many as quickly combined with $750k value limit may actually reduce prices (in Sydney and Melbourne many 2bdr dogboxes normally selling for more can get discounted to the magic number just to be cleared)

      what’s clear with this scheme is that supporting house prices was not on the agenda … there is almost nothing in this scheme that supports house prices …

  4. I was in Melb CBD, hardly any homeless anywhere
    My GF told me sally capp Lord Mayor had put them in the holiday inn
    They’ll be loving it, room service warm bath bed

    There will be plenty of houses empty in 12 months, just turn all those to social housing

    The issue in 12 to 24 months won’t be housing, housing will be in abundance

    The issue will be food and energy shortages

    Don’t worry there will be more than enough housing

    Q Will all these homeless ever go back on the streets like pre COVID

    Guys watch series one, The Filthy Rich to Homeless on SBS DEMAMD

    For me it was very confronting and sad

    It was fantastic and great insight into the homeless in Melb

    It’s an absolute injustice if we don’t help the struggling

    Keep jobseeker (new start) double as now, and move Jobkeepers to Jobseeker at double the previous new start payment

    • +1 re newstart, Level before COVID was a national disgrace. And when you spend time with those supporting the homeless you realise that with a sufficient run of bad events anyone of us could end up there.

      • GlendaFMEMBER

        Yup, I lost almost everything a few years ago, and that was my biggest fear….it’s not very nice to contemplate.

    • happy valleyMEMBER

      Not going to happen under happy-clappy SFM and his LNP friends as the principle effectively is that if you are in the poo, tough titty. And look at how they went for the vulnerable in robodebt screwer to cover a $2bn budget “need”, when John Howard’s franking credit “refund” gift that keeps on giving sees $6bn leaks annually from the budget to fund the luxury lifestyle of boomer leaners. Says it all?

  5. A rarity for Rudd govt … “Few remember because it was a successful program free of controversy.”
    Social housing was an issue back in the 1970s let alone now … but the last 30 years has seen the safety net thinned out and trimmed by successive governments, particularly Coalition governments, and in good times “bludgers” have been easy political targets for spending cutbacks. Especially as social security is the largest spender in the Budget.
    With generationally low interest rates for government to borrow at, and an economic crisis to provide political cover for the spending … we seem to be running out of justifiable excuses for avoiding the Christian tradition of supporting the weak and vulnerable. We need to demonstrate our ideals in our actions … and a fair go is still an Australian value.
    And since we can’t rely on governments to spend on social housing annually without raiding the kitty, then we need to go hard now. Very much a missed opportunity for ScoMo. I hope he butters up and fixes it.

    • GlendaFMEMBER

      Yes, you’d think that the oft mentioned ‘christian’ nature of our wonderful PM would put this high on the agenda…..But then again…. ‘God helps those who help themselves’……thinking definition of which is ‘snouts in the trough’! So, bugger them, they’re just not helping themselves if they’re homeless!!

        • drsmithyMEMBER

          The pm is no christian. Make no mistake

          Well if – I was “schooled” the other day – the primary message of Christ was ‘watch out for the j3ws’, then few are, right ?

          Scomo is as Christian as most Christians, in that he picks and chooses the bits of scripture he likes and ignores (at best, directly contravenes at worst) the bits he doesn’t like.

  6. The Property Council are shameless.

    https://www.theage.com.au/politics/victoria/proposal-to-triple-first-home-owner-grant-defer-stamp-duty-as-recession-hits-20200604-p54zjj.html#comments

    The first home owner grant would be tripled and stamp duty payments deferred for three years under a $1.7 billion Property Council plan to kick-start the Victorian economy, which is in technical recession for the first time in almost 30 years. The council also wants the state government to provide a $20,000 cash boost for people buying new homes and unveil a new tranche of the HomesVic scheme to allow first home buyers to make purchases with a 5 per cent deposit.